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If you've been following the MBS Commentary, you know what a big deal this afternoon could be. Markets have been preparing for it for weeks and MBS Live members have been on top of those movements every step of the way.

This afternoon, when markets are convulsing mere milliseconds after the Fed Announcement, MBS Live members will know what's going on before anyone else. The accuracy and speed of our real-time price stream and alerts is unmatched.

China... Argentina... Emerging market currencies panicking over tapering... Overvalued stock markets "overdue for a correction..." There are plenty of culprits for the big, surprising moves seen in global markets over the past two days. But picking out any one of these factors would be to overlook what is probably the most important motivation: tradeflows.

The end of 2013 was skewed in favor of risk, stocks, etc. It was a pretty unhappy time for bond markets, remember? 2014 has seen two instances now of that pressure being equalized--first after NFP, and the second at the end of this week. The rush to assign blame simply fans a fire that may well have already been burning.

There was a chance that the pressure was equalized as 10yr yields ground into the 2.82 level. After all, one of the poster-children for this "risk-off" move--the stock market--closed within striking distance of all time highs on Wednesday afternoon, with no hint of the roller-coaster ahead.

The whole herd has quite simply moved in unison since then. Most market participants expected things to get increasingly calm into next week, and most market participants were wrong. When that happens, it adds not only to the pace of the ensuing move, but also to the determination to find and assign blame.

The time to understand this wave will come as soon as the time to ride it has clearly come to an end.

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Sung Kim : "these types of crises tend to play out over time do they not? the risk to not locking is some sort of positve resolution or news over the weekend, which doesnt seem probable. VIX still is not that high, seems like more downside to equity markets... you might lose some on monday, but next week will be exciting"

Victor Burek : "but we have fomc"

Sung Kim : "IMO fomc is going to take a back seat"

Sung Kim : "they are not going to increase, cant imagine that happening, so assuming the market is perfect, 10bn already priced in, if anything there is upside?"

Jeff Anderson : "Stock market still getting smoked. Stock lever seems to have disengaged a bit for now. Guess we'll see how the afternoon goes."

Matthew Graham : "Yen-lever is perma-engaged. Stocks are just easier to discuss/conceptualize. "

About the Author

A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators.
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